Realty Income Corp. (O) Friday said it has signed a definitive agreement to invest around $950 million to acquire common and preferred equity interests in a new joint venture that owns a 95% interest in the real estate assets of The Bellagio Las Vegas.
The equity interests will be acquired from Blackstone Real Estate Income Trust, Inc. or BREIT.
The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions.
Upon closing, Realty Income will invest around $300 million of common equity in the joint venture, subject to certain adjustments. The company will have a 21.9% indirect interest in the property, in which BREIT will retain a 73.1% indirect interest, and MGM Resorts International will retain a 5.0% interest.
Realty Income will also invest $650 million to acquire a yield-bearing preferred equity interest in the joint venture.
The Bellagio, at the center of the Las Vegas Strip in Las Vegas, Nevada, is subject to an existing triple net lease with around 26 years of remaining term and is operated and maintained by MGM.
Sumit Roy, Realty Income's President and Chief Executive Officer, said, "We are pleased to initiate our Credit Investment platform through a preferred equity investment in the Bellagio joint venture. Credit Investments are a natural adjacency to our traditional business, allowing us to provide additional value to our clients while leveraging our core competencies in transaction sourcing and structuring, and real estate and credit underwriting and monitoring."
In the deal, PJT Partners served as lead financial advisor to BREIT. Simpson Thacher & Bartlett LLP is acting as BREIT's legal counsel.
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